The S&P 500 finished the day higher by around 35 bps, but it was more mixed than that. The equal weighted S&P 500 ended the day higher by just four bps. The divergence was due to the help of the mega-cap stocks lifting the broader index higher, with FAAMG+T all helping and contributing most of the gains. The only two sectors to finish firmly green were technology and consumer discretionaries.
There was a nearly perfect diamond pattern in the S&P 500, a very bearish reversal pattern. Monday's high was in line with a 78.6% Fib retracement of the peak to trough move lower from the past few weeks. Plus, with all of those open lower gaps, a drop to 4,360 would make a lot of sense. Today is Tuesday, and that day of the week is most famous for, well, turnarounds.
VIX
The VIX finished the day slightly higher, at 16.30. Now, I know technical analysis on the VIX isn’t “suppose” to work. Still, you can see the shape of the falling wedge in the chart, a reversal pattern. Who knows, it may even be confirming the bearish diamond pattern in the S&P 500 above.
Shanghai Comp
There was also that bearish descending triangle currently in the Shanghai Composite that bears watching after China’s horrible third-quarter GDP print.
Flatter Curve
Meanwhile, yields on the short-end of the curve continued to rise, with the 2-year finishing the day up by two bps at 42 bps, while the 30-year finished the day down two bps at 2.03%. The prospects of QE were sending short-rates higher, while longer-term rates were pricing in slowing growth. It had the 30-2 yr spread on the verge of a massive breakdown, leading to significant curve flattening.
Apple
Apple (NASDAQ:AAPL) had a stellar day on the back of its new AirPods and MacBook launch, plus these new M1 MAX/PRO chips. Maybe Apple has transformed into a company that deserves an Nvidia-like premium with these high-performance chips they are now producing? Something to think about for sure. The stock was struggling around resistance in this $145 to $146 level.
Micron
Can you believe that Digitimes was reporting that DRAM prices are likely to fall even more in the first quarter? Geez, Micron Technology (NASDAQ:MU) can’t get out of its own way. $58 is a long way from here.
PayPal
I had thought PayPal Holdings (NASDAQ:PYPL) was going to head lower, but it was starting to look better these days. The stock held support at $257, and the RSI broke that downtrend. Now the shares appeared to have formed a falling wedge pattern. A push above $271 sends the share higher to $280 for starters.
